Record Increase in State Medicaid Spending Projected

Margaret Dick Tocknell, October 28, 2011

Continuing economic woes at the state and federal levels, increased Medicaid enrollment, and the end of the federal stimulus program will contribute to a projected 29% increase in states’ spending for the Medicaid program in fiscal year 2012, according to a survey of Medicaid officials in all 50 states, released Thursday from the Kaiser Family Foundation’s Commission on Medicaid and the Uninsured. That would be the largest increase in Medicaid history.

The American Recovery and Reinvestment Act was a double-edged sword for the Medicaid program. While it pumped more than $100 billion into state coffers to help hold down program costs, it was short-lived, lasting only three years, and it restricted states from cutting Medicaid beneficiaries. The program ended in June 2011, leaving states with fewer dollars to cover more enrollees.

"Unemployment remains high with increasing numbers of poor and uninsured keeping pressure on state budgets and Medicaid programs to meet growing needs," said Diane Rowland, executive vice president of the Kaiser Family Foundation, in a statement. “The cumulative effect of two recessions since 2001 and a decade of constrained spending has left no cushion and many of the latest cuts will hit at the core of the Medicaid program."

The joint state-federal Medicaid program provides healthcare coverage for 59 million beneficiaries and accounts for 16% of national health spending. Almost 75% of the enrollees are adults and children; the elderly and disabled account for the remaining beneficiaries.